Blackstone Group, the private equity firm’s publicly traded partnership, is buying multistrategy hedge fund GSO Capital Partners, which has $10 billion in assets, said Blackstone spokesman John Ford. The $930 million purchase price includes the 20% portion of GSO owned by Merrill Lynch, he said. The price comprises $620 million in cash and parent Blackstone Holdings units and up to an additional $310 million in cash to be paid over the next five years, depending on realization of GSO earnings targets.
Blackstone plans to buy back up to $500 million in Blackstone Group and Blackstone Holdings common units to help fund the deal because Blackstone executives believe the company’s units are undervalued, Mr. Ford said.
Blackstone wants to add the credit-based hedge fund to complement its total $30 billion in hedge fund of funds and more than $4 billion in distressed and long-short hedge funds, Mr. Ford said.
GSO founders Bennett Goodman, Doug Ostrover and Tripp Smith will manage the company; Mr. Goodman will join Blackstone’s executive committee.
